Four Suggestions as You Face Your Industry’s Steamroller

Remember the scene in the first Austin Powers film where Powers, attempting to escape in a steamroller, warns one of Dr. Evil’s henchmen to move out of its path? Despite its comically slow speed — and a huge distance between them, the guard stays rooted to the spot, yelling Stop! … until it’s too late. (The scene dissolves to his Donna Reed-like wife getting the news and noting tragically: “People never think how things affect the family of a henchman.”)

On the industrial stage, something like that scene plays out all too often. A company finds itself in the path of an unstoppable industry disruption, can hardly fail to see it, yet simply fails to act. Only, it’s not at all funny.

Consider the pharmaceutical industry, the focus of a recent global survey my colleagues and I conducted. We asked nearly 200 life sciences executives about long-term trends that posed fundamental threats to their businesses and how management was dealing with them. Despite the fact that all were able to foresee developments unfolding over the coming decade with the power to irreparably damage their companies, 76 percent of the European respondents and 81 percent of the American ones said their companies had made no significant changes to strategy to counter those threats. (Executives representing Asia-Pacific life sciences companies were more sanguine, with 56 percent indicating their firms had prepared for an industry shock).

In the face of knowable threats, is your own company making more than a futile effort to cry Stop? If you fear not, here are the suggestions we’re sharing with the industry leaders we serve:

Inject a steady flow of timely information and (sometimes harsh) outside perspectives into your strategic thinking. This means fresh information heard on the street, not just more searches on Google, and the use of outside experts to identify oncoming threats that they see and you don’t. I’ve seen this work wonders for a number of companies that want neutral, unvarnished views of their competitive position. A large pharmaceutical firm, for example, was about to make a big bet on a new class of drugs. But a panel of outside experts that had been assembled to critique the strategy warned management about an emerging risk. Citing early warning signals that were not being emphasized by the scores of industry newsletters and Wall Street analysts, it saved the company from the move that a competitor subsequently took — to its detriment.

Develop scenarios of how the world might look five or ten years from now. No one can predict the future, but by combining known trends in various ways it is possible to anticipate multiple possibilities — likely story lines about shapes the market could take — for good or ill. The few companies that have mastered this discipline have benefited mightily. A decade ago Oracle developed a series of scenarios that anticipated massive industry consolidation. Instead of waiting to be steamrolled, the company acted on this intelligence and went on a ten-year acquisition binge, acquiring over 90 companies from 2003 to the present at a pace surpassed only by Google. The result: Oracle became one of the most successful companies in back office database products and tools and has now moved onto advancing in the next market, the cloud.

Experience threats through war games. There is no substitute for feeling and “touching” the disruption before it arrives. War games translate arguments and assumptions about the future into a tangible setting, allowing rival contestants to play out roles and experience risks. A successful war game can anticipate the moves of market players with an uncanny degree of accuracy. Multinationals have used war games to align strategy in global markets, where regulations and competitors differ. In a number of instances, I have seen war games acknowledge the threat from changing government regulation, informing the company that it must proactively work with authorities to help moderate new regulations, which in turn softened or averted the disruption altogether.

Set trip wires for action. War games and scenarios should provide you with threads that you can track in order to determine which future world is emerging. You can spot these signals far enough in advance to change strategic direction — but you must regard them as imperatives to make timely decisions and to act on them.

Preparing for a future industry shock and anticipating its direction is all about honest, steady collection of intelligence and the readiness to alter your plans based on what you have learned. Plenty of executives lose sleep over approaching disruptions; a few vocally oppose them. Neither response will move you out of a steamroller’s path. To survive, you’ll need to watch, reexamine your position, make tough decisions, and take timely action.

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